The Employee Retirement Income Security Act of 1974 (ERISA) preempts any state law that "relate[s] to" a benefits plan covered by the Act. 29 U.S.C. Sec. 1002(1). In a host of cases beginning shortly after the enactment of ERISA, the Supreme Court construed this pre-emption provision expansively. Two years ago, however, in New York State Conference of Blue Cross and Blue Shield Plans v. Travelers Ins., 115 S. Ct. 1671 (1995), the Court appeared to rein in the preemption clause, suggesting that in areas of traditional state regulation the pre-emption clause applies only where its application would further the purposes of ERISA. In Dillingham, a unanimous court confirmed this change in direction.At issue in Dillingham was a California prevailing wage law. Under that law, state public contractors are required to pay their workers prevailing local wages unless those workers are enrolled in a state-approved apprenticeship program. Arguing that such apprenticeship programs are ERISA-covered benefits plans, a contractor asserted that the prevailing wage law "relate[s] to" ERISA-covered plans and is therefore pre-empted by the Act. The Ninth Circuit agreed, and in Dillingham the Supreme Court reversed.
The Court began by noting that a law relates to a covered benefit plan under ERISA's pre-emption clause if it has a "connection with or a reference to such a plan." The Court then found that California's prevailing wage law does not make reference to an ERISA plan under the clause because the effect of the law is not limited to ERISA-covered benefit plans. Specifically, the prevailing wage law applies to apprenticeship plans funded out of an employer's general assets and therefore not subject to ERISA. The Court also found that the prevailing wage law lacks a sufficient connection with ERISA-covered plans to trigger pre-emption because the law simply provides employers with an economic incentive to obtain state approval for their apprenticeship plans. Relying on Travelers, the Court held that a law which only "alters the incentives, but does not dictate the choices, facing ERISA plans" is not sufficiently connected to an ERISA plan to trigger pre-emption. Consequently, as Justice Scalia observed in his concurrence, it appears that at least in areas of traditional state regulation pre-emption under ERISA will be no broader than in other areas of the law.
The NAM filed an amicus brief opposing the ultimate result in this case.